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25/05/26
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Asian Stocks Rally on US-Iran Deal Hopes
Asian equities advanced broadly on Monday as investors welcomed weekend reports suggesting progress toward a possible US-Iran agreement, lifting demand for risk-sensitive assets. Japan’s Nikkei 225 climbed past the 65,000 mark to a new record, while shares in South Korea, Hong Kong, and India also gained momentum. The move reflected a stronger start to the week after several sessions of geopolitical uncertainty.
Sentiment improved after reports indicated that Washington and Tehran may be close to an arrangement that could extend a ceasefire for 60 days and reopen the Strait of Hormuz. The prospect of reduced tensions in the region helped drive crude oil prices lower, easing concerns about inflation and supporting risk appetite across financial markets. Lower oil prices also put downward pressure on bond yields, adding to the appeal of equities.
The rally, however, remained tempered by unresolved disputes. The US and Iran still appear divided over the Strait of Hormuz and Tehran’s nuclear program, and the absence of a formal agreement leaves room for renewed volatility. In addition, President Donald Trump said on Sunday that his representatives should not hurry into a deal, underscoring the fragility of the current optimism.
Broader market sentiment is also being shaped by a difficult macroeconomic backdrop. Recent US inflation data came in sticky, while several Federal Reserve officials have delivered hawkish comments that keep alive the possibility of further tightening. That combination has limited the scale of the risk-on move, even as investors respond positively to lower energy prices and hopes of de-escalation.
Trading conditions may stay thin, with holidays limiting liquidity in many European and US markets. Even so, geopolitical developments are likely to remain the main driver of market direction in the near term, with investors closely watching for any signs that the tentative progress can turn into a durable agreement.
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